Correlation Between Peapack Gladstone and Lakeland Financial

Can any of the company-specific risk be diversified away by investing in both Peapack Gladstone and Lakeland Financial at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Peapack Gladstone and Lakeland Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Peapack Gladstone Financial and Lakeland Financial, you can compare the effects of market volatilities on Peapack Gladstone and Lakeland Financial and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Peapack Gladstone with a short position of Lakeland Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Peapack Gladstone and Lakeland Financial.

Diversification Opportunities for Peapack Gladstone and Lakeland Financial

0.79

Correlation Coefficient

Peapack Gladstone  Lakeland Financial

Poor diversification

The 3 months correlation between Peapack and Lakeland is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Peapack Gladstone Financial and Lakeland Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lakeland Financial and Peapack Gladstone is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Peapack Gladstone Financial are associated (or correlated) with Lakeland Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lakeland Financial has no effect on the direction of Peapack Gladstone i.e., Peapack Gladstone and Lakeland Financial go up and down completely randomly.

Pair Corralation between Peapack Gladstone and Lakeland Financial

Considering the 90-day investment horizon Peapack Gladstone Financial is expected to under-perform the Lakeland Financial. In addition to that, Peapack Gladstone is 1.32 times more volatile than Lakeland Financial. It trades about -0.09 of its total potential returns per unit of risk. Lakeland Financial is currently generating about -0.1 per unit of volatility. If you would invest  7,323  in Lakeland Financial on December 1, 2024 and sell it today you would lose (682.00) from holding Lakeland Financial or give up 9.31% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Peapack Gladstone Financial  vs.  Lakeland Financial

Peapack Gladstone

Risk-Adjusted Performance

Very Weak

Over the last 90 days Peapack Gladstone Financial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Lakeland Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lakeland Financial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Peapack Gladstone and Lakeland Financial

The main advantage of trading using opposite Peapack Gladstone and Lakeland Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Peapack Gladstone position performs unexpectedly, Lakeland Financial can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Lakeland Financial will offset losses from the drop in Lakeland Financial's long position.

The idea behind Peapack Gladstone Financial and Lakeland Financial pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.